By Doyinsola Oladipo
NEW YORK (Reuters) - Sustainable fuel startup Air Company has multi-year agreements to sell jet fuel made from captured carbon emissions to carriers JetBlue Airways Corp and Britain's Virgin Atlantic, the companies said on Thursday.
Financial terms were not disclosed.
Under the memoranda of understanding, JetBlue will buy 25 million gallons of Air Company's sustainable aviation fuel (SAF) between 2027 and 2032, Air Company said in a statement confirmed by the carriers. Virgin Atlantic will purchase up to 100 million gallons of SAF over 10 years.
New York-based Air Company said it uses carbon dioxide from a variety of sources, such as ethanol plants, to make SAF.
The global aviation industry is under pressure to reduce carbon emissions and find ways to meet the 2050 net-zero emissions target set by the International Air Transport Association (IATA) in 2021.
"We're excited to be working with Air Company to reach our 10% SAF target by 2030," said Holly Boyd-Boland, Virgin Atlantic's vice president of corporate development.
The industry, which contributes about 2% of global carbon dioxide emissions, faces formidable challenges in reaching that goal as technologies such as electric and hydrogen-powered aircraft are still unproven.
Global airlines and aerospace manufacturers are betting on SAF, which is made in tiny quantities from feedstocks like cooking oils and animal waste, and can cost two to five times more than conventional jet fuels.
Global investments are expected to increase SAF annual production from over 33 million gallons to over 1.3 billion by 2025, according to the IATA.
The Biden administration is aiming to increase SAF production to at least 3 billion gallons per year by 2030.
(Reporting by Doyinsola Oladipo in New York; Additional Reporting by Rajesh Kumar Singh in Chicago; editing by Peter Henderson and Richard Chang)